Walmart sees a gloomy 2023 despite topping holiday-quarter earnings

The retailer was said to have attracted budget-conscious shoppers who were looking for food, gifts, and household goods at lower prices, and continues to gain market share in grocery, including among higher-income households that are spending cautiously.

However, its shares fell about 4% to $140 in pre-market trading after the company gave a weaker-than-expected outlook for the year ahead as consumers trade down and purchase fewer discretionary items.

In terms of forecast estimates, they expect same-store sales for Walmart U.S. to rise between 2% and 2.5%, excluding fuel, in the year ahead, which is below analysts’ expectations for 3% growth. It also anticipates adjusted earnings per share to range from $5.90 to $6.05 through January 2024, compared with analysts' estimates of $6.50 per share, according to Refinitiv IBES data.

This gloomy outlook could be indicative of a slow rebound from Walmart's misreading of last year's shift in demand away from home goods and apparel as Americans watch their budget because of high inflation.

Walmart CFO also said: “And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to the previous period. We've not been in a situation like this where the Fed is raising at the rate that it does. And so that’s why we take a pretty cautious outlook on the rest of the year.”